A few months ago I wrote about the Petition for a Writ of Certiorari filed by Perfect 10, Inc. with the U.S. Supreme Court in Perfect 10 v. CCBill, et al. In a nutshell, the Ninth Circuit previously ruled that the intellectual property exception to Section 230 immunity only pertains to federal (not state) intellectual property claims. Perfect 10 wants the Supreme Court to hear its appeal and rule that the exception applies to both federal and state IP claims, meaning Section 230 immunity would not protect a defendant from state (and federal) IP claims. Now it’s the Respondents’ turn to weigh in.

John P. Flynn, a partner in the Phoenix law firm Dioguardi Flynn Jones LLP, represents Respondents CCBill LLC and CWIE LLC. John kindly shared with me the brief filed last Friday opposing Perfect 10’s petition. John’s co-counsel is Jay M. Spillane of the Los Angeles law firm Spillane Shaeffer Aronoff Bandlow LLP.

Zeroing in on a serious potential problem with Perfect 10’s position, Respondents argue in their submission that the Ninth Circuit’s ruling below

is consistent with the findings and intentions of Congress to promote the development of Internet computer services with a clear nationwide immunity. . . . [w]ere the rule otherwise, Internet computer service providers would be faced with uncertainty across all fifty states as to which state claims for relief are, involve, or are akin to ‘intellectual property.’

In other words, adopting Perfect 10’s interpretation of Section 230(e)(2) could/would have a chilling effect upon online publishers across the country, uncertain as to their exposure to liability from one state to another.

That said, I still find Perfect 10’s position on the merits – which if ever adopted would require guidance from the courts on what constitutes a state IP claim – more persuasive. I haven’t researched the relevant legislative history, but it would seem that if Congress meant to limit the exception to federal IP claims, it could (and would) have said so (as it did in 230(e)(1)). If the legislative history clearly supported the opposite conclusion, I would have expected to see a reference to same in the Ninth Circuit’s ruling and/or Respondents’ brief (which instead cites Zeran). And as an aside, Respondents’ use of Potomac Electric Power Co.‘s rule of statutory interpretation (“members of the judiciary must put aside their ‘appraisal of the wisdom or unwisdom of a particular course consciously selected by Congress’”) could come back to haunt them. Some courts may not like Congress’ apparent decision to provide a broad IP exception to Section 230 immunity, but it’s not their (the courts’) job to approve or disapprove. However, it’s probably not fair for me to opine on the merits here, given neither parties’ brief was offered as a merits brief. Which brings me to my next and more important point. Who cares about the merits right now?

Remember, Perfect 10 is trying to persuade the Supreme Court to hear the case, not to rule in its favor, just yet, on the merits (although merits arguments can of course sometimes help get the job done). And on this issue, I think Respondents have the better arguments. For example, Respondents accuse Perfect 10 of trying to manufacture a conflict between the Ninth Circuit’s ruling and UCS v. Lycos, arguing that in UCS the First Circuit

did not analyze the meaning of ‘law pertaining to intellectual property,’ but simply assumed that the state trademark dilution claim at issue came within this exception. Such an unconsidered assumption, without analysis, does not create a conflict worthy of review.

Furthermore, “[i]n light of the [purported Florida trademark law] claim’s failure on independent First Amendment grounds, the First Circuit’s view as to the inapplicability of Section 230 is dictum and does not raise a material conflict with the Ninth Circuit decision.”

Respondents offer up plenty of other reasons why this case does not presently belong before the Supreme Court, such as (i) there is no conflict with Supreme Court precedent, (ii) the case was remanded by the Ninth Circuit to the district court, and precedent apparently directs that a case in this posture is not appropriate for High Court review, (iii) following final judgment, Perfect 10 will presumably have another opportunity to request Supreme Court review (and the Court would benefit from a richer record), and (iv) “[t]he law concerning the scope of the ‘intellectual property’ exception . . . is undeveloped.”

My guess is that Perfect 10’s petition (and the various amicus briefs filed in support thereof) will not muster enough votes to obtain the writ. But I wouldn’t mind being wrong on this one, at least from an academic standpoint.

Jeffrey N. Mausner, counsel for Perfect 10, Inc., has kindly shared with me the Petition for a Writ of Certiorari filed last week with the United States Supreme Court on behalf of his client in Perfect 10, Inc. v. CC Bill LLC, et al (Docket No. 07-266). He also permitted me to post the 143 page filing on my blog.

Perfect 10’s Petition seeks review of the Ninth Circuit’s March 2007 ruling, as modified one month later, in Perfect 10, Inc. v. CC Bill LLC, et al. as it relates to 47 USC 230(e)(2). As you may know, Paragraph (2) provides that nothing in Section 230 “shall be construed to limit or expand any law pertaining to intellectual property.” The Petition presents the question of whether “the Ninth Circuit err[ed] in reading any law to mean only any Federal law, in conflict with a decision of the First Circuit and statutory construction rules of this Court.” (internal quotations omitted, italics and hyperlink added).

Perfect 10 is concerned that the Ninth Circuit’s ruling, which grants Section 230 immunity for state IP claims, “will sharply erode the ability of those in the entertainment industry to seek meaningful legal recourse for the violation of their valuable publicity rights.” The company would appear to have good reason to be concerned with the treatment of publicity rights, and other state intellectual property rights, under Section 230, given the obstacles it has faced in attempting to protect its federal copyrights under the DMCA framework.

Here are the three main arguments offered by Perfect 10 in support of its Petition:

1. The Ninth Circuit erroneously broadened Section 230 immunity by effectively amending (e)(2) to read “any Federal law” instead of “any law.” Relatedly, the Ninth Circuit also disregarded statutory construction principles when it effectively narrowed the (e)(2) exception from “any law” to “any Federal law.” (noting that when Congress meant ‘just federal’ in another Paragraph of the same statute, it said so).

2. The Ninth Circuit’s decision conflicts with the First Circuit’s UCS ruling and other courts holding that state IP claims are not barred by Section 230.

3. Congress did not adopt the argument – embraced by the Ninth Circuit – that because state IP laws are not uniform they should not “dictate the contours of [Section 230 immunity].”

Although it understandably did not not delve into the impact of having fifty states’ laws to consider, I thought the Petition was quite persuasive. It surely goes without saying that were the Supreme Court to rule that Section 230 does not immunize state IP claims, we would see more of these types of actions filed, which would presumably result in a (desirable?) chilling-effect on certain online conduct (at least with respect to non-judgment proof companies), especially given the fact that few (any?) states have enacted protections from state IP claims comparable to the DMCA takedown provisions.

One last observation. In a footnote, Perfect 10 maintains that, in addition to its rights of publicity and wrongful use of trademark claims, its unfair competition and false advertising claims also “arise under laws pertaining to intellectual property, as they are both based on, among other things, rights of publicity violations.” If another federal appellate court considering the issue rules that Section 230 does not immunize state IP claims, or if the Supreme Court takes this appeal and reverses, online companies and the courts alike will obviously need some guidance as to what constitutes state IP law/claim.

On brief with Mr. Mausner was Daniel J. Cooper, General Counsel for Perfect 10, Inc. Responses to the Petition are due September 28, 2007.